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Sunday, July 30, 2006

"I Can't Get No Satisfaction"

"Shopping For Satisfaction" originally uploaded by samuraiphotog
Customer Service matters. When done correctly, it leads to customer satisfaction which, in turn, leads to LOYALTY! But, there's another angle to consider: the power of dissatisfaction!

The July issue of InFurniture magazine featured a small writeup on Wharton's Jay H. Baker Retailing Institute Retail Customer Dissatisfaction Study, done in conjunction with the Verde Group. This is the release link, and here are the highlights from the release.

Essentially, whereas customer loyalty is the road to profitablity, customer dissatisfaction is the road to ruin. The effects are even more frightening than I had ever imagined! Consider:
More than 50 per cent of Americans report that a negative shopping experience of a friend or colleague will prevent them from setting foot in a store altogether. The Study ... finds that as shopping problems get repeated, they often get embellished and actually become up to five times more damaging to customer retention than the initial negative shopping experience itself.

"This study is unlike anything we've seen before because it shows that for every 100 American shoppers, 64 people will be told about a store's poor products or services and no matter what that store does to entice shoppers - sales, promotions, advertising, marketing - those people will not set foot in their store," says Paula Courtney, President, The Verde Group. Nearly one- third of all U.S. retail customers who have a bad shopping experience will tell four people in such a way that those four people will be more negatively impacted than the person who initially had the problem.

Stephen J. Hoch, the Patty and Jay H. Baker Professor and Chair of the Marketing Department of the Wharton School ... adds that another risk identified by the study is that customers who have a problem are happy to tell their friends in a very powerful way but they don't bother to tell the company. In fact, shoppers experiencing problems are five times more likely to tell a friend about it than contact the company.

"If businesses want to stop the bleeding from negative word of mouth, it's clear that they need to invest in ensuring that each customer experience is first rate - from adequate parking, to trained front line staff, to the right product mix, both in stock and on the shelves," says Dr. Hoch.

Customer Dissatisfaction Study Key Findings:
* 50 per cent of consumers experience a problem. Those who have a problem, experience 3 problems on average.
* 31 per cent of consumers tell one or more friends about their problem. On average, shoppers tell four people about their negative shopping experience.
* Almost half of shoppers have avoided a particular store in the past because of someone else's negative experience.
* Negative word of mouth influences future patronage up to 5x more than the person who experienced the problem first-hand as a result of:

  • Problem embellishment – each time someone tells the story it is exaggerated
  • Risk aversion - why shop at a store with problems? There are many other choices for consumers.
  • Location, exit barriers or general convenience – potential shoppers have no previous relationship with store because it is not close to home, they are not a part of an awards program and so on

Top problems consumers experience are related to the following three areas:
* Time – can't find parking and too long to get in or out of store
* Merchandising – ease of finding product, store layout and product information displays
* Front line staff – poor product knowledge and lack of courtesy

Other findings:
* The bigger the store, the more likely consumers are to experience problems
* Category killers are supposed to be experts, but don't always meet customers' expectations about information and product availability
* Department stores and mass merchandisers have more issues related to
time and/or accessibility
* Men are less loyal than women
* Men and women are remarkably similar in the problems they experience AND their tolerance levels - men are, however, less likely to return to a store if the product they were looking for is out of stock

"U.S. businesses should take note - every instance of customer dissatisfaction has the potential to negatively impact loyalty and ultimately, the bottom line. With this latest study, we now know that negative word of mouth is so powerful that it can deter potential customers from ever shopping at that store," says Ms. Courtney. "But there is hope - by taking steps to better understand the problems their customers experience, retailers can begin to immunize themselves against negative word of mouth."


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Thursday, July 27, 2006

Wiki Wiki!

"Obligatory Wiki Photo" originally uploaded by cogdogblog
'Wiki Wiki' means 'hurry! quick! in Hawaiian. Anyone going through the airport terminal in Honolulu, Hawaii notices the signs directing one to the Wiki Wiki airport terminal shuttle. The playful words, the balmy air, the bright tropical colors --all readily accessible in the open air terminal-- assured me in no uncertain way that I was NOT in NYC!

Wiki has been getting more press lately as a means to writing collaboratively -- the most prominent and accessible example of which is Wikipedia [this link takes you to Customer Service]. If you haven't yet tried Wikipedia, the collaboratively written encyclopedia, you should. I was impressed with what I found.

From the History of Customer Service section:

The overall quality of customer service - in society and in specific industries - will continue to be determined by the relative balance of power between suppliers and consumers; it will improve as competition becomes more intense, and decline as competition decreases.
Previous posts in Flooring the Consumer have mentioned that power is shifting to the consumer. Combine that with how over-retailed we have become [i.e., competition has increased dramatically] and it's no wonder that the consumer is demanding a better shopping experience.

From Strategic Advantage Through Customer Service section:

A company can outperform rivals only if it can establish a difference that it can reserve. Customer service can be such a difference. It is very difficult to control, and therefore difficult to imitate, ... because of its variability. The level of service may vary greatly between two providers in the same organization. It may also vary from one moment to another, even as delivered by the same provider. The difficulty is compounded in multi-unit operations: in addition to variability within units, there is also variability among units. That is both the challenge and the opportunity. The consistent delivery of superior service requires the careful design and execution of a whole system of activities that includes people, capital, technology, and processes. The few companies that can manage this system do stand out, and are sought out. This is the foundation of their sustainable competitive advantage.
Wow! superior customer service can be the basis for sustainable competitive advantage! No wonder it leads to LOYALTY [see posting titled "Good Tea, Nice House"]!

The Customer Service Culture includes a Service Ideology:

An organization’s ideology comprises its purpose (Why are we here?) and values (What do we stand for?). Organizations renowned for providing excellent customer service have typically defined their purpose in terms of service – to serve their customers, and to serve their members. Their values typically include integrity, trustworthiness, reliability, personal responsibility, industriousness, continuous improvement, respect, and consistency.
Satisfying consumers means meeting their needs in terms of Good People, Good Offerings, Convenience and Good Environment. See the table for specific and valuable details [e.g., clean and low-pressure environment...]. But, take note:

In a competitive environment, however, satisfaction may not be enough. To stay in business, firms must be at least as satisfactory as their competitors. Moreover, firms that aim to gain profitable growth must increase the number of their customers, while reducing the cost of customer acquisition. This is particularly true of companies that compete in mature industries. The objective then is not merely to satisfy customers, but to convert them into promoters (customers who recommend a company to others). Promoters serve to increase a firm’s clientele, without increasing its cost of acquisition – i.e. with no additional marketing or promotional expense. But customers do not make recommendations lightly. When they make a recommendation, they put their own reputations on the line. Firms must earn that recommendation through the consistent delivery of outstanding customer service.

Hmmmm. Excellent customer service ---> Satisfaction ----> Loyalty ----> Recommendations ----> Profitability!

And, by the way, one of the things that makes for the perception of good customer service is that it be provided promptly - that is wiki wiki!

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Tuesday, July 25, 2006

Customer Service Matters!

"Rated Best in Customer Service" originally uploaded by Striatic.
Hey! Customer service REALLY matters!!

In the July 2006 issue of EPM Communications' Marketing to Women newsletter [a must-read resource for those seriously committed to learning more on the subject], an article titled "Price and Service Gain Importance With Female Shoppers" summarizes some of the findings from the WSL Strategic Retail report titled "How America Shops 2006. "...The authors find that what really matters today [with female shoppers] is service - and the most crucial part of good service is respect for the customer. ... If women aren't treated with respect by sales staff, they will quickly look elsewhere."

Another Marketing to Women newsletter article titled "Good Customer Service Is a Must-Have, Says Women" summarizes the Frank About Women study titled "Elevated Expectations: The New Female Value Equation". It, too, reinforces the criticality of customer service: "Retailers may consider good customer service a point of differentiation, but women consider it an absolute necessity - and most will CHANGE STORES to get it. More than nine in 10 [97%] expect good customer service everywhere they shop, and 89% will choose a store with better customer service over a competitor offering similar merchandise and prices. Eight in 10 women [80%] say they'll REFUSE TO GO BACK to a store after only ONE BAD EXPERIENCE, and 94% say they tell others about bad customer service experiences." [The press release refers to a desire for 'Nordstrom-quality' experiences.]

I was also intrigued with a 7/12/06 release from Corporate Research International, which specializes in mystery shopping and customer satisfaction surveys, titled "Real People Rate Customer Service". Over 5000 consumers participate via online surveys, rating how they perceive a business' customer service, across 14 different industries. Nordstrom, Southwest, Washington Mutual [aka WaMu], Ace Hardware and Marriott are some of the highest ranking companies. You can go directly to this site and play with some of the data. Note that you can filter the data based on male/female as well as state, age and race.

In looking up 'customer service' in Wikipedia [more about that in the next post], I came across this fabulous blog on the customer experience. It's called Customers Are Always and includes many thought-provoking posts. I am adding this resource to Flooring the Consumer's blogroll.

Finally, do take a look at this 7/21/06 article from the Times Union, Albany NY titled "Want me coming back? It's easy" that discusses the importance of customer service [i.e., speed, service and convenience] to satisfy consumers. The author's final comments: "The lessons here? If you're the home-improvement chain, car dealer or truck rental agency that failed to give me speed, service or convenience, YOU'LL NOT GET MY BUSINESS again. But if you can meet those basic needs -- I don't even need the "ma'am" -- I'll BEAT A PATH TO YOUR DOOR. "

[By the way, the irony of the picture above is that the store manager came out to chase away the photographer. So much for being best in customer service!]

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Thursday, July 20, 2006

[Cat and] Dog Days of Summer

"Woman Dogs and Cats" originally uploaded by Sassyarts
What if, ..... rather than being people, our customers were cats or dogs? What kind of retail experience would we need to create? How would stores be different? How would merchandise be shown?

Well, for a cat, you'd probably need some brightly colored objects [maybe feathered?] flying from the ceiling, some others darting across the floor, and a sunny spot up high to bask in while observing the activity. For a dog, you'd need some interesting smells to investigate, and some of that sunny space, but down low.

Cats are relatively similar in size, so displays could be uniform, although ideally stacked in a stair format to encourage vertical browsing. Dogs, on the other hand, vary wildly in size - from a chihuahua to a great dane - and creating appropriate displays would represent amazing complexity. For both, their agility diminishes with age and - assuming the ageing animal is our target - we would need to make decisions accordingly.

Interestingly, more retail establishments are catering to animals [primarily dogs]. Not so much as the target customer, but as an adjunct to the primary human customer:

  • Starbucks on MacArthur Blvd in Washington, DC regularly welcomes dog walkers. Outside the door lies a rug; there's a water bowl, and it's easy to attach the leash to the garbage receptacle nearby.
  • Florida has just signed the "doggie dining" law
  • In anticipation of a similar law being passed in Chicago, chef Didier Durand of Cyrano's Bistrot is ready with a carefully tested canine prix fixe menu

Ridiculous! you say? Perhaps, but.... power is shifting to the [human] consumer and we are only seeing the beginning of radical reconsiderations of accepted norms for meeting consumer needs. So, when is the last time that you looked at your retail environment, experience, branding from the perspective of your consumer?

If your consumer were a cat or a dog, you would probably be in deep sununu. Luckily, your consumer is not. But, don't get too comfortable. Your consumer is -more often than not- a woman, and chances are that your retail environment, experience and branding can be greatly improved.

More establishments are turning upside down their assumptions about how things should be done. Take Target. They have redefined the discounter model. I have fun shopping Target; it's full of surprises, clean, bright, and easy to navigate, never disappointing.

Even consumer banking is getting on the bandwagon. Learn more about Washington Mutual, affectionately called WaMu. They are redefining the whole banking experience including different and patented branches! I'm hearing more and more about Commerce Bank, too: they are open Sundays, early in the morning, and late in the afternoon. What a concept being open when it's convenient for your customers!

So, as you think about your business, carefully consider your customer: observe how she interacts with your store environment, how she reacts to your store experience, how she responds to your product offerings and displays, whom she shops with, what she talks about. How might you do things differently to increase her delight with your total experience? Can she reach product easily? Can you avoid making her bend over or get on the floor to look at stuff? [I hate having to sit on the floor to look at product and I've had to do it more than once]. Is she distracted by the folks she is shopping with and can you help occupy them? [crayons, plain paper and chairs go a long way]. Can you bring fashion statements to your environment with some storyboards or vignettes? How clean are your bathrooms?

Remember that women pay close attention to details; these all represent clues as to what experience they can expect from your environment. And, if you can create a total experience that delights them, they will remember, they will come back, they will buy from you and they will tell everyone they know. So, what's to lose?

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Friday, July 14, 2006

"Good Tea. Nice House."

So said Worf, the no-nonsense Klingon from Star Trek: The Next Generation, to express his appreciation for the hospitality he was shown. I can't tell you the name of the episode, but it is forever engraved in my mind for several reasons: seeing Worf handle a dainty tea cup, watching the change in his usual warrior-like demeanor, and hearing his concise expression of appreciation. [picture courtesy of Paramount Pictures]

Welcoming customers into one's space is an important part of the retail experience. In fact, it is a critical one that can make or break the relationship you are trying to develop with them. So why is it that it is so often forgotten?

Here follows a true story from my friend Gary in NYC as recently experienced by his wife, Shirley:

Shirley went to Home Depot on 23rd St. to get some information and background on carpet for our bedroom.

She wandered around the department for 15 minutes without finding a sales assistant, and finally approached two young women with Depot shirts on sitting in a corner chatting and asked for assistance. One of the women asked her if Shirley expected them to get up!

Then they went off in this litany of contradictory and confusing information. The women disagreed on whether the products were available, how long the delivery was, etc. Shirley’s favorite was when she was quoted an installation price, she noted the banner on the carpet said installation was free, and the sales rep told her “Just because it’s free doesn’t mean you don’t have to pay for it!”

They finally gave her a print out, which is basically indecipherable, and she left fuming!

Her comment, I don’t care if ABC is more expensive, I don’t trust Home Depot, if their service and installation is as incompetent as their sales staff, and it will be another horror story.

What frightens me most about this story - apart from the sheer preposterousness of it - is that this is more the norm than the exception and NOT JUST AT BIG BOX RETAILERS.
Let's put this in perspective. Why bother with the niceties? Why care about customer service or being hospitable?

  • Who generates profit for you? ---> your customers
  • Who are your customers? ---> over 80% of the time, women
  • What makes women special as consumers? ---> shorter repeat purchase cycle than men, AND word-of-mouth referrals
  • And, if you satisfy your women customers, you will also satisfy your men customers!!

Seems like a no-brainer to me. Your profitability is inextricably linked to the quality of the relationships you have developed with your customers [and your employees as your representatives to the customer]. It's how you develop loyalty.

Fred Reichheld - an expert on customer loyalty - has just released a new book titled "The Ultimate Question". I remember being stunned by his article "The Number One Number You Need To Grow" in the December 2003 issue of Harvard Business Review. I was excited to be hearing renewed buzz on the subject. This link will take you to an interview with Reichheld that describes the ultimate question he asks, which is: How likely would you be to recommend us to a friend? Here follows an excerpt:

People who score nines and tens are promoters. They account for 80% to 90% of the positive word of mouth. They generate the growth in business and make employees proud to be there. Passives are those who give you a seven or an eight. They’re perfectly satisfied for the moment, but they’ll switch to a competitor if something better comes along. Then are those who score zero through six. Those are failing grades. Those customers are detractors. They complain and will eventually defect. If you take the percentage of your customer base who are promoters, subtract the percent who are detractors, you come up with the net promoter score, or the net worth of your customer base.

Pretty powerful! You can read more about the book, loyalty and Fred Reichheld at his blog [note that this will point you to a Dec. 2005 posting; but I found it a good big picture post. You' ll find lots of interesting examples in other postings.]

So, shouldn't we all become passionate and ferocious zealots in pursuit of offering hospitality and fabulous service to our customers to generate loyalty? It sure beats the alternatives!

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Sunday, July 09, 2006

Doing Good

My company is a sponsor of the Iron Girl series; the first event of the year took place this morning in Boston today July 9th. I expect that it was a huge success with beautiful weather, lots of fun, and countless personal records set. More on the Boston event later.

In case you haven't heard about Iron Girl, do check it out. It's a cool series of events: 5k and 10k walk/runs, duathlons, and triathlons. Iron Girl is about empowering women to become active, to take control over their lives, to have fun in the process, and connect with likeminded women. Their tagline: "it's your turn".

We got involved because of our sponsorship of the IronMan World Championship [i.e., the killer triathlon in Kona, Hawaii] IronMan World Championship, the ultimate test of endurance and durability. Since we have positioned our brand, Wear-Dated, as the durable brand of carpet fiber, we considered IronMan a no-brainer. When Judy Molnar [read her amazing story] came up with the concept of Iron Girl, we got very excited, since it represented an opportunity to be in conversation with our primary carpet consumers: women!

Andrea Learned in her blog "Learned on Women" has a post about the benefits of sponsoring causes and mentions Iron Girl. The Iron Girl connection certainly got my attention, but the post also got me thinking about the power that doing good deeds has with consumers, especially women. Women have a group focus; they worry about the people around them [family, friends, associates...], how to keep them healthy, happy, involved, etc. Since they are so time-stressed, they can't save the whole world. However, they can and do make decisions to save the world through their purchasing decisions. Check out the "Doing Well by Doing Good 2005 Study Results".

Here is the list of top ranking companies:
1 Johnson & Johnson 2 Ben & Jerry’s 3 Walt Disney Company (tie) 3 Whole Foods (tie) 5 SC Johnson 6 Kraft 7 3M (tie) 7 McDonald’s (tie) 7 Procter & Gamble (tie) 7 Southwest Airlines (tie)

These are the 12 key drivers determining a company's performance:
1. Values and treats its employees well and fairly (85%)
2. Executives and business practices are ethical, honest, responsible and accountable (83%)
3. Goes beyond what is required to provide safe and reliable products and services (75%)
4. Responsibly markets and advertises its products and services (72%)
5. Committed to social responsibility, economic opportunity, environmental protection, etc. (72%)
6. Listens to community or customer input before making business decisions (68%)
7. Is active and involved in the communities where it does business (68%)
8. Committed to diversity (gender, race, etc) in the workplace and its business practices (65%)
9. Company's products and services enhance peoples' lives (64%)
10. Corporate values and business practices are consistent with my own beliefs (62%)
11. Supports a cause or issue that has led to improvement and positive change (61%)
12. Donates or invests its fare share of profits, goods or services to benefit others (59%)
Kind of interesting! Where are you in terms of supporting the things that she considers important? And, how do you let her know about it?

Per the survey, these are the 5 most credible ways of letting consumers know [note how many are word-of-mouth generators]:
1. People and organizations who have been helped or are personally involved in the company’s corporate citizenship
2. News coverage on television and radio
3. News coverage in newspapers and magazines
4. Partnering with non-profit organizations, educational institutions, government and other groups I trust, respect and admire
5. Community events, fundraisers, sponsorships, symbols of solidarity -- e.g., ribbons, bracelets, bumper stickers, etc.

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Friday, July 07, 2006

Fashion Statements

Have you considered how many utilitarian items in our lives have been transformed into fashion statements? Communication devices [Razr, Slvr cell phones, PDAs, ...], entertainment devices [iPods], appliances [Viking ranges, Duet washer/dryer...], cars [Mini Cooper], clothes, wall paint [used to be white only, no longer!], even food!... It's actually astounding, but also extremely exciting.

For many consumers, and particularly women consumers, our homes are the ultimate fashion statement, capturing how we feel about ourselves, our accomplishments, our personal sense of style. We invest a great deal of effort and emotion in nurturing it, improving it, tweaking it and generally making sure that it's just right.

So why is it than when we shop for flooring, we so often have an experience that has nothing to do with fashion statements? Why is it that when I drive down a main drag, I notice more flooring stores that make me hit the gas pedal rather than slow down or even stop to browse? Where are the large uncluttered windows that draw me in visually? The subtle [or not so subtle] cues that tell me that fashion statements are being made here?

And, when I do stop to go in, why is it that I'm on my own because the store isn't organized in a way that makes sense to me? My fashion statements are about color and that's how I shop!

I'd rather postpone that purchase decision than have to deal with an unpleasant shopping experience, especially when I have lots of other options available for my time and money -- including doing nothing. If I can't find something on amazon.com or through google, I'd rather browse brick/mortar stores that make me feel good about being there: the Apple store, IKEA, Coldwater Creek, Aveda, Chico's, Whole Foods.... Wouldn't you?

We are entering the age of the empowered consumer thanks to the internet. She is able to access great information about what is available. Check out this article about the resurgence of carpeting, titled "Carpeting: It's right back under your feet" "Carpeting: It's right back under your feet". This kind of information resonates with consumers looking to make fashion statements. So how do we make sure that she can act on her desires?

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Wednesday, July 05, 2006

Putting Women In Their Place - Front and Center

Please welcome Debi Binder, Flooring America’s vice president for marketing, who contributed the following post:

Many thanks to C.B.Whittemore for the invitation to “guest blog” on the new Flooring The Consumer site. I feel like I’ve officially entered the interactive Digital Age, although now the pressure’s on to come up with a catchy blog handle.

This is a great idea: a new site devoted to enhancing the floor covering shopping experience. I love it! There’s no question that offering a comfortable, worry-free shopping experience with sales professionals who are knowledgeable and trustworthy can be the difference-maker for the consumer –which as Christine has already pointed out, is usually a woman.

In fact, it’s much more than usually. Eighty percent of retail flooring customers are women between the ages of 35 and 65. That is a huge number. If we’re not connecting with this demographic group, we won’t be long for this business.

In recent years, there’s been a substantial shift in the industry to better meet the interests and expectations of women by trending more towards color and design, full room aesthetics, and personalized attention. Women are shopping for value, but they’re also “values” shoppers, meaning they want a shopping environment that is trustworthy, comfortable, and more focused on lifestyle and design consultation.

All of us in the industry have a profound interest in working toward elevating the shopping experience for our customers and creating stores that are inviting, and speak to the twin desires of value and trust. Listening to the consumer will be key to our mutual success, and sites like Flooring The Consumer are welcome additions to the conversation.

In many ways, a blog is a lot like our cooperative and other buying groups. We’re all built on harnessing the vast experience, insight, and entrepreneurial spirit of our members. Everyone has a voice, and together, we improve our ability to serve the customer. In turn, we earn the consumer’s trust and respect, which is Step One toward building a strong record of accomplishment and success.

Editor's Note: You can learn more about Flooring America at www.flooringamerica.com and also check out www.flooringknowledge.com/.

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